Indictments tell how H-1B visas were used to undercut wages

Federal agents on Thursday said they arrested 11 people in several states in a crackdown on H-1B visa fraud and unsealed documents that detail how the visa process was used to undercut the salaries of U.S. workers.

Federal authorities allege that in some cases H-1B workers were paid the prevailing wages of low-cost regions and not necessarily the higher salaries paid in the location where they worked. By doing this, the companies were " displacing qualified American workers and violating prevailing wage laws," said federal authorities in a statement announcing the indictments.

[ InfoWorld's Bill Snyder argues  the H-1B visa has got to go, but doesn't support the proposal by Sen. Charles Grassley to lay off foreigners first. Meanwhile, the Senate approved strict rules on the hiring of H-1B workers. ]

Employers are required to pay H-1B workers prevailing wages, but those wage rates can vary significantly, by tens of thousands of dollars, depending on the region. How many U.S. workers may have been displaced was not detailed by federal authorities.

The arrests were carried out by federal, state and local agents working in Iowa, California, Massachusetts, Texas, Pennsylvania, Kentucky and New Jersey. The government's action "is the result of an extensive, ongoing investigation into suspected H-1B visa fraud, mail fraud and conspiracy," said Matthew Whitaker, the U.S. attorney for the Southern District of Iowa, in a statement. The investigation was dubbed Operation Pacific Vision.

The H-1B workers were also victims, according to the federal indictments. Some were hired for jobs that didn't exist . One worker from Pakistan, for instance, who arrived in the U.S. for a programming job, ended up with a job pumping gas.

The Iowa-focus and connections raised in the indictments are notable in one regard. It's the home state of the U.S. Senate 's leading critic of the H-1B program, Republican Chuck Grassley , who released in October a study on visa fraud by the U.S. Immigration and Citizenship Service (USCIS) that found that one-in-five H-1B applications were either fraudulent or had violated a law or regulation in some other way.

The company that seemed to get the most attention from federal authorities is Vision Systems Group, which authorities said had its principal places of business in Somerset and South Plainfield, N.J., and an office in Coon Rapids, Iowa. The company was cited in a 10-count indictment. Calls to the company seeking comment were not returned by press time.